Rising petrol and diesel prices perk up CNG car sales in first half of FY19

The biggest player in the segment, Maruti has seen CNG volumes surge 50% to more than 55,000 units in H1

It is going to be a record year for sales of cars that run on compressed natural gas (CNG) on account of a surge in petrol and diesel prices.

The sale of CNG cars is up about 52 per cent during the first half (April-September) of FY19 even though overall car sales have grown by just 7 per cent. Maruti Suzuki and Hyundai are the main players in the CNG car space. 

The biggest player in the CNG segment, Maruti Suzuki, has seen its CNG volumes surge about 50 per cent to more than 55,000 units during H1. 

The company has the largest portfolio of CNG cars in the country and its WagonR is the most-sold CNG vehicle. “In September this year, the government has announced plans to roll out 10,000 CNG outlets. This reflects the government’s priority towards CNG as an automobile fuel. This may encourage buyers to shift to CNG vehicles,” said a company spokesperson.

R C Bhargava, chairman of Maruti Suzuki, said the government had realised that the quickest way of reducing the import of crude oil and bring down the domestic consumption of petrol was by expanding CNG. “We are ramping up the production of CNG vehicles and currently eight models are available in this category. Growth in demand clearly demonstrates the change in consumer preference in spite of long queues at CNG stations,” he added. The ownership cost of a petrol car has increased almost 13 per cent since January to Rs 78.78 a litre in the capital. Even CNG price has increased by double digits but the cost of ownership of a CNG vehicle is significantly lower, prompting the buyer to purchase these cars. According to Indraprastha Gas, which retails CNG in the National Capital Region, CNG (priced at Rs 44.30 per kg) offers 61 per cent savings in running cost compared to petrol.

Growth in demand for CNG cars is coming from the commercial taxi and fleet segment as well as from the personal segment. Korean carmaker Hyundai has rolled out a CNG option in the new Santro launched last month. Of the 30,000 plus bookings that have come for the entry-segment car so far, 21 per cent is for the CNG variant. In August 2017, the company launched a CNG variant in the Xcent Prime sedan which is used exclusively by the taxi segment. More than 1,800 units of this vehicle was sold between August and December last year. In the first nine months of 2018 calendar, the company has sold almost 7,500 units of this vehicle. 

Akshay Kashyap, managing director of Gurgaon-based Greenfuel Energy, which supplies CNG system parts to auto companies, said the gap between CNG and petrol or diesel would always be attractive enough for users to shift. 

“We now have a visibility of volume and seek to increase localisation in our parts and reduce costs. We continue to see strong growth in demand from three-wheeler makers too. In trucks too, CNG options are becoming available and will bring additional growth,” he said. 

The demand for CNG vehicles will expand when the fuel is available in more cities. The city gas network (CNG and piped natural gas) is present in just 130 of the 700 plus districts.